Optimal tax theory and the taxation of housing in the US and the UK

First, we survey recent research in the application of optimal tax theory to housing. This work suggests that the under-taxation of housing for owner occupation distorts investment so that owner occupiers are encouraged to over-invest in housing. Simulations of the US economy suggest that this is true there. But, the theoretical work excludes consideration of land and the simulations exclude consideration of taxes other than income taxes. These exclusions are important for the US and UK economies. In the US, the property tax is relatively high. We argue that excluding the property tax is wrong, so that, when the property tax is taken into account, owner occupied housing is not undertaxed in the US. In the UK, property taxes are relatively low but the cost of land has been increasing in real terms for forty years as a result of a policy of constraining land for development. The price of land for housing is now higher than elsewhere. Effectively, an implicit tax is paid by first time buyers which has reduced housing investment. When land is taken into account over-investment in housing is not encouraged in the UK either.

Destination UK: international property investment and the role of taxation

This research examines whether or not foreign property investors enjoy tax and other advantages over their UK counterparts and how, if such advantages exists, UK quoted property companies can redress the balance. Current issues such as lack of liquidity, inequalities amongst asset classes, and differences in tax burden are examined in detail. The report will be of interest to property investment specialists, valuers, fund managers, institutional investors and their advisers.

Judicial and Legislative Considerations in the Taxation of Compensation Receipts: An International Comparison

In 1995 the Federal Commissioner of Taxation released Taxation Ruling TR 95/35 - an attempt to comprehensively address the appropriate capital gains tax treatment of a receipt of compensation awarded either by the courts or via a settlement - still a lack of consensus regarding the appropriate treatment of such awards - a private binding ruling presently the only way a taxpayer can determine their liability with any certainty - the Australian position compared to that of the United Kingdom and Canada.

Retirement income policy and the taxation of superannuation in Australia

Superannuation is a form of savings for retirement. The savings are invested and earn income, but the proceeds are generally not available until the beneficiary reaches retirement age} The federal government's retirement income policy has three components, two of which relate to superannuation: the age pension, which provides income support to men aged 65 and over and to women aged 62 and over.2 The pension is means tested and does not depend on previous labour force participation or individual contributions; a compulsory superannuation scheme (under the Superannuation Guarantee Charge (Administration) Act 1992 (SGA Act)), which requires contributions to be made by employers on behalf of all employees, whether full-time, part-time or casual;3 and encouragement, through the taxation system, of voluntary contributions to approved superannuation funds.4 In May 2002, the government released a report, the "Intergenerational Report", 5 which identifies issues associated with Australia's ageing population and considers the fiscal implications of those changes. The Report noted that a steadily ageing population is likely to place significant pressure on government finances. It also noted that one of the key priorities for ensuring fiscal sustainability should be "maintaining a retirement income policy that encourages private saving for retirement and reduces the future demand for the Age Pension". 6 The main way the government has sought to encourage that private saving is through the tax system, primarily by the use of tax concessions. Over the past 20 years, however, the taxation of superannuation has grown in an extremely ad hoc manner and is now inequitable, inefficient and overly complex. This article suggests that the taxation of superannuation in Australia is in urgent need of a complete review. The article further asserts that, if an appropriate framework can be devised, changes could be introduced as budgetary pressures allow.